What's Up: Aramex is tipped for growth as it shrugs off the effects of a slowdown in the global economy and expands its international reach.
Aramex delivers good results for investors
The global economic slowdown has not been kind to courier companies, but Aramex has bucked the trend.
The Dubai company's net profit for the fourth quarter, released last week, rose to Dh57.2 million, 4 per cent better than in the same period a year earlier.
Although Aramex's profit was in line with consensus estimates, some analysts expressed disappointment that an 18 per cent increase in revenue had not filtered through to its bottom line.
The company attributed this to an increase in fuel costs and the impact of the Arab Spring. But Aramex had delivered decent results in spite of a difficult operating environment, said Yong-Wei Lee, a senior fund manager at Emirates NBD.
"Given the fact that there's been a bit of a slowdown in the global economy in the last two quarters of 2011, and the logistics business is tied in to global trade, the news that the company has been able to grow its top line is encouraging," he said.
Aramex's eye-catching red scooters are finding new routes to travel, too. The company went on a spending spree last year, acquiring firms including Berco Express in South Africa, OneWorld Courier and In-Time Couriers in Kenya, Ireland's Aquaship Agencies, and forming a joint venture with SinoAir in China. A larger international reach should result in stronger income for Aramex this year, analysts from NBK Capital wrote in a research report.
"We believe the company will start to see some relief from pressure on margins going into 2012 as some of the new ventures and acquisitions in Africa … begin to bear fruit," the report said.
Aramex's shares rose 1.6 per cent yesterday to Dh1.85 on the Dubai Financial Market (DFM) General Index, having advanced in four out of the past six trading sessions.
That said, the company has trailed the DFM General Index since the start of the year, rising only 2.7 per cent. The broader index has risen 9.5 per cent since the start of the year.